"For their part, Republicans...have termed the student loan changes another Washington takeover."

Just for laughs, I followed the link there--to find a WaPo op-ed piece from the laconic and folksy Lamar--bemoaning how the veritable buffet of appetizing loan selections he claims were being offered by the federally subsidized and taxpayer guaranteed private sector to students would be shut down.

Without EVER mentioning any of the terms, nterest rates or origination fees being charged by that oh-so benevolent private sector--or the billions they (a.k.a. the poor, beleaguered big banks of America) were raking off in exchange for running that alleged smorgasbord of loanology.

And then he proceeded to slam the proposed federal loan program that would replace the private sector pigs....err...banks at the taxpayer funded trough--because it would offer loans at a fixed rate of 6.8%.

Curious me--I thought okay--if Lamar is up in arms about that rate--then surely the private sector must be charging less, right?

Um...no.

I checked the first bank that popped up in Google from the search phrase "student loan rates"--which was Chase.

They're offering loans for college with variable rates of up to the current LIBOR (London InterBank Offered Rate) PLUS up 10% interest.

Yum!

For a slightly less varnished perspective on what the nirvana of student lending with fat cat bankers as middlemen is like--here's a clip from an actual news article--and not just Lamar's opinion of the the facts:

"(New York State Attorney General) Cuomo is investigating alleged kickbacks to school officials who steered students to certain lenders. His investigators say they've found numerous deals that benefited schools, financial aid officers and lenders at the expense of students.

Investigators found that many colleges have established "preferred-lender" lists and entered into financial arrangements with those lenders. Some colleges have "exclusive" preferred-lender agreements with the companies.

So far, six schools have agreed to reimburse students a total of $3.27 million for inflated loan prices caused by revenue-sharing agreements, (New York State Attorney General) Cuomo said.

Cuomo says he suspects that dozens of financial aid officers around the country have arrangements that he's called deceptive, unethical and at times, illegal."

You can read the full story here:

http://www.usatoday.com...

Bon appetite!

the loan reform is great...i hope it happens quickly enough for my daughter to get increased pell grants. i won't mind writing smaller checks to the feds instead of the ones i write to sallie mae now.

'Tis time Rush, go to Costa Rica,
T'will make us Dems all cry "Eureka",
They won't have conniptions
'Bout phony prescriptions,
The way Druggists do in Topeka!

First of all, let's recognize that there are two types of student loans: gov't loans (Stafford, PLUS) and private/alternative. The Chase loans mentioned above are private loans, where banks set rates for borrowers based on their credit history; on the other hand, the federal gov't has always set the interest rates for Stafford and PLUS loans. Banks can't change those interest rates. In fact, if you have good credit, you could get a private student loan with an (admittedly variable) interest rate of 3-4% right now versus taking out a PLUS gov't loan which can charge 8.5%. (Through the Direct Loan program, PLUS loans have a rate of 7.9%)

1) Where is this money coming from? There was a good reason the banks were the ones lending money - because they have the capital at their disposal. Considering our current state of affairs and how other governments are less likely to lend us money, I seriously question where the gov't will find the billions upon billions of dollars each year that students borrow in the form of Stafford and PLUS loans.

2) Private loans through banks are necessary. Have you seen the difference between what a student can borrow in gov't loans versus the total cost of education at a college or university? Stafford and PLUS loans most certainly do not cover all expenses. If a student's parent was denied a PLUS loan, the most a freshman can borrow in Stafford loans is $3,500. The amount increases by $1K until the third year when they can borrow $5,500 each year until out of school. Who are we kidding - this won't even cover room and board for a year at most schools.

The subsidies paid to banks by the gov't are a guarantee that if loanholders default, the gov't will pay the bank a certain percentage of what was borrowed...so the gov't can then go on to collect on defaulted loans by legally garnishing wages. The gov't gets their money back plus interest. And yet the banks get a bad rap.

I can understand our gov't stepping in for health care, considering that we're the only industrialized nation that doesn't have some kind of state-sponsored or guaranteed health care. But for student loans...I still don't understand the reasoning.

What should happen with any student loan overhaul (I guess we’ll be calling it “Student Loan Reform”, “SLR” or similar, soon) is an option to work off the government loan through public service. Maybe it would be to take a job teaching in a public school in a high need district, for a term commensurate with the size of the loan. Perhaps military service might qualify, or the Peace Corps for that matter. There is plenty of need in the community, and plenty of people who are in debt up to their eyeballs from student loans. Merge the two and maybe we could come up with some logical solutions that benefit everyone.

The NYT’s own commentary on this proposed overhaul, in its present form, isn’t very flattering. You can find it, here: http://www.washingtonpost.com...

Maybe if student loans weren't available on such favorable terms, students wouldn't be so quick to borrow too much money that will take them years to repay. Then, maybe, our universities and colleges would reduce the cost of attending those fine institutions. I still can't understand why sitting in a lecture hall with 100 other students to listen to a professor is so expensive, or sitting in a room with 20 students listening to a grad student is so expensive. $40,000 a year for the privilege of partying seems a little excessive. The government should put its foot down and make college accessible to those students who want to learn and don't want to be $150,000 in debt when they get out.

Moses parted the red sea and the politicians have divided our country.
It is time to stop being a democrat. It is time to stop being a republican. It is time to stop being an independent. Remember when it didn’t matter what your party affiliation was? We voted different parties and we got along. Now more that ever it’s time for all Americans to be Americans first.
What is good for American? How can I help America? How can I help America get back on track? We’re like frogs in the cold water on the stove, only now it’s getting hotter and hotter and we aren’t even aware that we’re about to get cooked. We have to think as one and stop letting the political system and the politicians divide us. A house divide against it self cannot stand.
These politicians are turning us into animals, brother against brother, and parent against son. And for what? Why? We have got to stop being parrots for what the TV and radio, and internet and blogs, and newspapers are saying. We have to research and get our own facts. Don’t listen to anybody, think for yourself. We have to demand that the media print or air FACTS only. Enough with the opinionated news media.
Don’t do it for me. Don’t do it for the government. Do it for yourself, for your children. Do it now, start today. What is good for America? Not what we have going on today. God help us if we don't get ourselves together soon.

Well, I wonder a lot about this health care law and its benefits and at what cost it is to whom, especially with regard to:

1. The constitutionality of everyone having to buy health insurance and not everyone having to pay taxes. Something just doesn't seem right with that.

2. The sweet deal that labor unions got with regard to the Cadillac Tax. For union labor/employers, the tax only kicks in at the family rate tier; for non-untion labor/employers, the tax kicks in at the individual rate tier. This something just doesnt' seem right about this--actually, it appears to be out-right discrimanatory to favor one labor group over another. In 2009, unions made up 12.3% of the workforce.

3. Whether there will be equal participation in program by employer sponsor self-insured (self-funded) plans, which are shielded form state rules and laws. It's estimated that 55 million workers and 60 percent of companies employing more than 500 people provided self-insured health plans to employees and their dependents in 2009. It would seem only fair that self-insured plans have the same regulation as fully-insured (traditional) plans--but whether or not that will be so hasn't been discussed very much.

4. Why education reform would be tied to the heath care bill. Education issues have no business being address in a health care law--but that hasn't been discussed much either in a context other than that education is an important issue to Obama, but what does that have to do with heath care reform.

Well, from what I've seenso far, it appears that taxpaying, non-union labor/companies, and smaller businesses may be paying most the costs, while the unissured, the under-insured, the unions and some big businesses will be reaping most of the benefit. So, I maybe I missing something, but I don't see how this new heath care law is such a great deal (and big tax break) for middle class Americans?!

Does America shortchange its public schools so badly to produce a paying market for remedial education?

I am so glad that the government is going to directly overlook student loans. In the hands of private lenders/banks like Sallie Mae, etc., students were manipulated and tricked into thinking that they would be in control of repayment of loans, etc., based on their abilities to repay. However, Sallie Mae et al. along the way decided to abuse their positions and made up/change the rules which benefitted their bottom line. In other words, students like myself were indirectly threatened to make payments, even if we are unable to afford them. Basically, we are prisoners of these student loan companies as a result of how we were suckered and our loans were mishandled by these companies for years.

This new reform is a start, but the mess by these private student loan companies is well beyond what can be fixed in a day or a year. The government has a long way to go to undo the decades of damage from horrible accounting and mismanagement of our loans. The psychological toll and financial strain on our daily lives with a toxic, dark cloud over our innocent heads are downright inhumane, and in the long run, unproductive for our society.

Thank you, President Obama, for undertaking this huge task to demand transparency from these private lenders/guarantors/banks, a.k.a. predators and thieves, and eventually demand justice for us victims.

I wonder if people will still be praising the benefits when they find out that the health insurance industry found loop holes around every restriction and their premiums have gone up 10 to 20 percent. Hmmmm, maybe we shouldn't have rewarded them with that massive bailout. But whatever dudes, it's Obama time!

To Sara at post number 4:

"1) Where is this money coming from? There was a good reason the banks were the ones lending money - because they have the capital at their disposal."

Um...no. What the federal government is taking back over--is the lending of federal funds. It wasn't the banks' money in the first, second or third place.

The federal government gave the banks the money to make the loans--AND then guaranteed the loans after the banks served as middle men on the loans.

While I recognize and applaud the sincerity of your post--the idea that the federal government needs to "find the money" to do anything is at best naive.

The federal government--as a sovereign--controls the currency--and does not need to scrounge under the couch cushions for it--in fact, they don't even need to print the money.

Very little of the money supply on the planet exists any more in the form of paper money.

Most of it, in fact, is nothing more than digits in computers and servers.

I would strongly suggest you read what James K. Galbraith--a noted economist and former head of the Joint Economic Commission of the U.S. Congress--wrote recently on this topic.

You can find it here:

http://economistsview.typepad.com...

Government should deal with universities directly to disperse student loans. Cut out the private banks altogether. Universities will be more competent in handling the finances and repayment processes. This will produce more jobs as well.

Perhaps we can use the same model to involve hospitals in overlooking and developing insurance plans? "Microfinance" these universities and hospitals to get back on their feet and become self-sufficient. Stop bailing out, investing, and supporting private banks (loan companies, insurance agencies, etc.), which continue to enrich and benefit the top few percent of the population.

Universities and hospitals will have more incentives to put the interest of the recipients of education and medical care ahead of corporate greed. They understand how catering to public interest establishes loyal relationships, which translates into business and revenue for their institutions.